Interview with David Chizewer (PO ’88) on Medicaid and Education Reform

By Helen Guo (PO’20)

Transcribed by Delaney Hewitt (SCR ’20)

David Chizewer, a Pomona College graduate and principal of Goldberg Kohn’s litigation group, visited campus on April 13th to speak with current students about the benefits of a career in law. Following the event, the Claremont Journal of Law and Public Policy hosted Chizewer for an exclusive interview to discuss the impact of his work on Medicaid and education reform. Chizewer has served as a co-lead trial counsel that obtained the then largest verdict and judgment in the history of the federal False Claims Act ($334 million) in United States of America ex rel. Cleveland A. Tyson, et al. v. Amerigroup Corporation, et al. (2007). He has also served as co-lead trial counsel for a class of 600,000 children on Medicaid against the State of Illinois in Memisovski, et al. v. Patla (2004), obtaining some of the most sweeping reforms ever to a state Medicaid program.

CJLPP: “In the panel that we had earlier today, we talked about how you were the co-lead for Memisovski, et al. v. Patla, in which it was found that Illinois was not complying with the Medicaid act. This prompted reform within the state towards rigorous and more proper analysis with the compliance. Do you believe that compliance with Medicaid is now adequate, or is there more room for growth within that?”

Chizewer: “I would say it’s a hard question to answer, only because we finished up the case when judgment came down in 2004, and we’re now in 2017. The case was focused on the Illinois Medicaid program. Every state’s Medicaid program is somewhat different, although they have to comply with the federal Medicaid act if they want to participate and receive the federal dollars and almost all states do. In Illinois, we haven’t had a budget in several years since the new governor came into power, so social services are completely inadequate and underfunded right now. It’s difficult to say on one hand that Medicaid is now adequate. It may be as bad as ever.

However, one of the interesting things about our victory in that case is that ultimately after the judge entered a declaratory judgment that the state was out of compliance, we then spent the next year negotiating a consent decree with the state as to the particular reforms that they would put into place. That consent decree then is entered by the court, and is in effect until it’s deemed released by the court. That consent decree, that was entered in, I think it was November of 2005, is still valid. Even if there are no specific appropriations today in the state of Illinois for specific types of medical care, we can take the consent decree and go into court and force the state to spend the money on Medicaid dollars only because we have that consent decree. Otherwise, they would be sharing in the underfunded budget like all the other programs. The consent decree essentially gives a priority to Medicaid dollars. So, the consent decree is still powerful and is still having important effects. Those effects were even greater and more impressive shortly after the consent decree was entered, and it’s still having an effect today, though given what’s happening in the state of Illinois – it is essentially bankrupt – it’s a pretty dire situation, even with the consent decree.”

CJLPP: “Do you believe that the reforms of the consent decree have affected other states and their compliance? Or has it stayed within Illinois?”

Chizewer: “I haven’t done a real analysis of that. I know that because of the legal rulings we received in that case, it has certainly affected how states have to structure their programs and the extent to which other states would be fearful that a similar lawsuit could be filed in their state. Basically, our case dealt with two aspects of the federal Medicaid act, and as I was explaining, a state is free to structure their Medicaid program any way they want, but they still have to comply with the federal Medicaid act, and there’s a lot of compliance rules if they want to partake in the federal dollars.

Illinois’ Medicaid program is funded 50 percent by the federal government, so they really need those dollars. The federal Medicaid act poses two particular requirements on them that our lawsuit was interested in. One is called EPSTD, which stands for Early Periodic Screening, Testing, and Diagnosis. So, basically that EPSTD provision applies to all of the kids who are on Medicaid up to the age of eighteen. It says you have to screen children for all kinds of health problems. You have to diagnose their problems, and you have to treat their problems. There are, for example, between the ages of zero and 12 months, the EPSTD schedule which requires the child to see a doctor every month, and more than once during the first month of life. So, I think there is to be 14 visits that a child needs to have by the time they are one. They have to be tested to see if there is lead in their blood, they have to get all of their vaccines, and then they have to get these regular checkups, and if something comes up on the checkup, they have to be provided with the follow-up treatment. We were able to show in our lawsuit, based on analyzing claims data, claims submitted by pediatricians and other service providers to these kids who were registered on Medicaid that there were not claims made for these types of services. Meaning that they weren’t being provided. So, that was one aspect of the lawsuit that we said “hey, the Medicaid program has to do a better job of making sure that these people are getting the treatment they need. It’s not just their responsibility for them to go and find it. The Medicaid program has to make sure that they actually get it.” The consent decree put into place all kinds of reforms, tracking performance and hiring vendors to help track to make sure the kids were getting the treatment. It also put in reimbursement reforms in terms of how much Medicaid was reimbursing doctors and service providers for those services, to give them a better incentive to do it.

So, the reimbursement part was sort of the second aspect of the federal Medicaid act, which our suit addressed. And that provision is called the Equal Access Provision. Believe it or not, the federal Medicaid act requires that anybody on Medicaid must have access to healthcare that is equal to the generally insured population. Which is an amazing requirement. What kind of poor person has access to healthcare that’s equal to someone who’s got a state of the art Blue Cross Insurance policy? So, we set out to prove that in fact no such equal access exists. Maybe it’s obvious when you think about it; of course that’s not happening. But to prove it’s not happening is a different sort of story. What we showed is that, both through the claims data and through anecdotal evidence, from doctors in emergency rooms, particularly pediatric hospitals, who would see these kids in the emergency room, realized that they were getting treated for things that they should have been treated for in a regular doctor’s office. And then, when they called to try to get doctors to try to do the follow-up care, they couldn’t find enough doctors who would treat these kids because their reimbursement levels were so low. In Illinois the reimbursement levels were maybe 48th out of 50 states. In Cook County, an expensive county, there’s no justification to why Illinois should have been 48th when the cost of providing the care is probably third or fourth. So we were able to force increase reimbursement rates.

Those are the two things that the law addressed, and the question, one of the big legal questions in the case, was whether the federal Medicaid act, particularly the Equal Access Provision and the EPSTD provision, were privately enforceable. Meaning, could someone other than the federal government come in and try and force a state Medicaid program to comply with those requirements. Because the requirements are from a federal law, and generally a federal agency, the federal government would be in charge of enforcing its laws, not private citizens. But where the provisions in the law are specifically tailored to benefit certain groups of people, and they’re specific enough, the law allows them to be enforced. So, there’s been a lot of litigation about that, but because this judge determined that those two provisions were privately enforceable, a lot of other states took notice, and presumably were paying a lot more attention to their compliance to those two aspects of the act.”

CJLPP: “You elaborated on how the results helped improve state compliance with Medicaid in terms of reaching low-income groups. In recent months, Congress has attempted to replace the Affordable Care Act, a law that greatly relates to and affects Medicaid. Why do you think these laws have become such controversial subjects?”

Chizewer: “I think there have been a number of proposals out on the table as to what to do with the Medicaid program in connection with healthcare reform generally. And, under the Obamacare a lot of what happened was, in an effort to cover more people, they expanded the Medicaid program and then provided more federal dollars to cover the people who are in the expanded number of people who are covered by Medicaid. The way the program is currently structured, Medicaid covers a percentage of what the state spends, so it’s essentially unlimited in terms of what the federal dollars require to fund Medicaid programs because the more states spend, the more the federal government has to spend. I think for politicians who are more in favor of a reduced role for the federal government and in people’s lives generally, they’d perhaps prefer local governments to handle the issue, if any government at all. They’ve wanted to limit the federal government’s expenditures on Medicaid and not have this unlimited amount of expenditure. So, the proposals on the table is what they call a block grant, basically the federal government says, “Okay, here’s x number of dollars, state. Take it and you figure out how to spend it. Don’t come back to us for more.” It’s really just an artificial way of reducing federal spending; you know to reduce deficits, etc. Typically, when people are trying to figure out how to reduce spending, the weakest groups, the ones with the least political power, wind up taking the biggest hits. Certainly, people on Medicaid do not have a lot of political clout.”

CJLPP: “Do you think that with this movement towards block grants, there will be other provisions that will take care of low-income groups or do you feel that low-income groups will be further hindered from healthcare access?”

Chizewer: “These block grant proposals have been on the table for a while, but now with Republicans controlling all three branches of government, maybe it’s more realistic that they will pass. Even governors, whether they’re Republican or Democrats, have been very suspicious of cutting Medicaid rolls because they don’t want a public health crisis on their hands. If there aren’t enough dollars provided for health care for poor people, there are going to be issues. So, certainly you becoming less healthy doesn’t result in you getting more political power, that’s for sure. Although, it does make things more desperate, and there’s a lot more interest in advocacy groups on a number of different levels. For example, people are pouring money into the ACLU, because now people who are generally inclined to support the positions of the ACLU now see some of those particular rights that are often defended by the ACLU are even more under attack. So, those organizations are becoming stronger. I suppose it’s possible that these crises, the healthcare crisis that we’re facing, has made advocacy groups stronger. You can see that’s probably one of the reasons why the replacement proposals didn’t go forward, even with Republicans controlling all three branches of government.”

CJLPP: “Continuing on the trend of healthcare, what are some of the most common situations you’ve seen within the realm of healthcare fraud?”

Chizewer: “One thing to understand is that the government spends a tremendous amount of money on healthcare, but the government is not providing healthcare. They really just generally act as an insurer. All they do is pay for healthcare. Generally speaking, they don’t provide healthcare. There are some exceptions, our veteran hospitals are all owned by the government, so in that sense sometimes they’re providing care to veterans. But, for the most part, they’re simply acting as an insurer. They don’t necessarily have a first-hand role in experiencing what’s going on with the actual provision of health care, all they’re doing is paying for it. Certainly, they have a tremendous amount of data saying what it is they’re paying for. But, generally, how the system is set up is that providers of healthcare, whether its pharmacies that provide drugs, hospitals that provide care, or doctors, they provide the service, and then they submit a claim to our federal Medicare program or a state Medicaid program, and the claim gets paid, generally speaking.

If there’s fraud out there, then you have to sort of go chase the fraud. There isn’t a lot of scrutiny on the front end to determine whether the claim is valid or not. There’s basically an assumption that the money that’s being asked for is valid. The government pays it, and then it tries to figure out if later whether the payments are appropriate. Because of how much money the government spends on healthcare, it’s an enormous business. And, there’s a lot of money to be made in healthcare. There are a lot of companies out to make a profit providing healthcare services or healthcare products. So, there is the temptation to commit fraud. Generally speaking, and I’ll get to the specifics in a minute, you know, our society is generally fairly tolerant of salesmanship, including sharp sales practices. People are trying to sell things to you and people understand that when you’re selling something it’s almost like they’re not expecting you to tell the truth about what it is you’re selling. Because after all, you’re just trying to sell somebody something. And, in fact, if somebody’s completely honest about the product they’re trying to sell it might even sound strange. Like, people would think you’re off kilter if you’re explaining what your product can’t do, even thought that might be the honest way to approach it.

In our healthcare system particularly, although it’s starting to change, you basically get paid for the services you provide. The more services you provide and the more products you provide, the more money you make. For example, we had a big case against one of the largest hospital chains in the country called CHS, Community Health Systems. What we alleged in that lawsuit was that CHS was directing the doctors in their emergency rooms and in all of their hospitals that they had a certain quota of people they must admit into the hospital for overnight stays because of profitability metrics. So, an emergency room doctor knows, for example, that they must admit 18 percent of the people that they see into the hospital for overnight stay, having nothing to do with whether the person needs to be admitted. So when they’re assessing somebody in the emergency room, imagine they’re treating you and they’re looking at “well how many people did I admit today, and how many people did I see? I’m only at fifteen percent.” Maybe they’re going to find a way, or justify to themselves a reason why they need to admit you. And you know, their mind will work and they’ll justify to themselves why they made the right decision. But, you know from the actual experience that there is no benchmark that says that, generally speaking, 18 percent of the people in the emergency room need to be admitted. That number was made up not to catch all the right people to be admitted, the number was based on profit motive. This provision was made to pay particular attention to people who are 65 and older because the hospital then knew that those people would have Medicare and the hospital would then get paid by the government for those stays. So, they were essentially admitting way too many people into the hospital, and the government was paying way too much money for that.

There are a lot of cases against pharmaceutical companies for trying to get doctors to prescribe drugs to people when they may not need them. For example, we have a case against Allergan, that’s a pharmaceutical company most known for making Botox, but they also make a range of eye care products, including a drug called Restasis. Restasis is a prescription treatment for dry eye. So if you have dry eye, maybe an ophthalmologist will prescribe Restasis for you, and you know, if you’re over age 65 and you’re on Medicare, the government will pay for that prescription and that can be from $70-100 a month, and you’ll need that prescription perhaps for the rest of your life, whereas, another way of treating dry eye is with $5 over-the-counter drops. A very subjective decision by the ophthalmologist as to whether to prescribe the over-the-counter or the Restasis. But, if the pharmaceutical company provides incentives to the doctors to prescribe Restasis, maybe the doctors are going to write more prescriptions for Restasis, and then therefore the government is going to wind up paying for more prescriptions than they actually need. It can be illegal for a company to incentivize doctors, for a company essentially to bribe them, for lack of a better term, to give prescriptions for their drugs. In this case, the allegations against Allergan were that they were providing all kinds of special free consulting services to doctors to figure out how to structure their practice, and make more money, providing continual legal education, all through a very small nominal web subscription fee of a couple hundred dollars a year, and they were providing services that may have been worth tens of thousands of dollars a year, and low and behold, doctors started writing more prescriptions, for example, for Restasis. And the government is out more money because of that.”

CJLPP: “It seems to me that you’re very passionate about working for the public interest, and you also expressed that during your panel as well as at the luncheon event. I wanted to ask you what you believe is the role of a litigation lawyer in working for the public interest. Why is that fulfilling, and what different ways can they work for the public interest?”

Chizewer: “You read about lawyers every day doing things for the public interest. In fact, it’s a funny thing, sometimes people might criticize lawyers, say there’s the famous line from Shakespeare that said “kill all the lawyers” and I think that, the context of that quote is, although I’m not a Shakespeare expert, if you want to have a corrupt society, the first thing you do is kill all the lawyers because it’s the lawyers who are upholding people’s rights in society. The public interest is a broad term and certainly, people who are accused of crimes need to be represented and lots of them don’t have the resources to be represented and sometimes don’t—it’s very prestigious to work for the US Attorneys’ Office and prosecute crimes, but there aren’t as many people that are taking a track to defend the people who are committing those crimes. So, sometimes, they don’t get the best representation. Even defending people who have committed crimes is serving the public interest. It is making sure that the government goes through the proper steps and that it doesn’t convict innocent people.”

CJLPP: “You seem to be defining what the public interest means to you. For you, would the public interest be anyone? Would it be people who are less privileged?”

Chizewer: “Yes, I would say two main areas. One area would be providing representation to people who can’t afford it, but who need it just as much as people who can. So that’s one obvious area of serving the public interest. But another way is to uphold the rights of citizens to make sure that our government is functioning properly, or at least in the way that somebody believes the government should function. You could be on both sides of public policy issues because you think the government should work in a particular way and you could be serving the public interest, advocating for certain rights that are more associated with liberalism or democratic principles, or other people advocating for issues that are more consistent with federalism or the republican principles; they’re both serving the public interest in the sense that they’re trying to champion the rights and principals that make our society function appropriately. What would not be in the public interest would be representing people in commercial transactions where they’re basically trying to further profit goals. Which is also extremely interesting work and nothing is wrong with doing that.”

CJLPP: “You were talking about how you founded a charter school during the luncheon, and you also are talking about now how Goldberg Kohn works with charter schools. Can you elaborate on some of the work you’ve done within that?”

Chizewer: “Charter schools themselves are a form of education reform because it basically, and although the charter school laws vary from state to state, the general principal is: if you think you can run a school better than the traditional public school in your district, you can apply to the district to start your own school. And, if they approve you, then for every student you attract to your school, you get essentially their per capita funding. It really provides instant school of choice, and the entrepreneurs and people who want to start these schools are generally public minded, and what they’re trying to do specifically is provide choice for kids who are economically challenged, who otherwise wouldn’t have a choice, that maybe who would be stuck going to a public school that’s not very good. It sort of creates competition in the system and allows even people who are economically challenged to have some choice or some control over where they’re sending their kids to school. It’s sort of an incubator for people to see how schools can do better and people should take what you’re doing and apply it in other ways. I think it’s been generally successful. It’s also controversial and the main reason it’s controversial, is because under most charter school laws, the teachers are not required to be part of a collective bargaining agreement. Of course, the way our labor laws work in this country, you can always organize a union and unions can always organize any charter school, but from the get go you don’t automatically sign up to be part of the union, like you do if you’re part of a traditional public school. So, unions, which are a very strong political force, in this country in particular the teachers unions have a lot of political power, do not like charter schools because it weakens their control.”

CJLPP: “In what ways does Goldberg Kohn work closely with charter schools?

Chizewer: We help them with their labor issues; help them deal with union campaigns. Unions are trying to organize charter schools. We help them deal with general employment issues, overall compliance, and how they interact with the public entities that govern them through contracts and those sorts of things. Some states, if you apply to a district, and the district turns you down, there are alternatives to getting approved and sometimes those alternatives could require litigation. The one case that we had, a charter school was turned down, and we felt that the rationale for turning them down was illegal. So we challenged that in court. We lost, but because of the attention from the lawsuit, we got political rallying around the city that ultimately turned down the school. And that city has since approved charter schools. So, sometimes even when you lose you can win in litigation. And you also need to be able to threaten litigation, sometimes file litigation, to the extent that people are trying to push around charter schools in ways that aren’t legal.”

CJLPP: “What would that constitute?”

Chizewer: “For example, as a result of the union negotiations within the Chicago public school system, the union, the Chicago Teacher’s Union, has a very strong political influence. They were threatening to strike and they don’t like charter schools. Generally, Chicago has been very supportive of charter schools. There are somewhere between 10 and 15 percent of students in the Chicago public school system attending charter schools. The unions are not in favor of that and they exercise their political power. In their contract negotiations, they convinced the Chicago public school system to agree to a moratorium on new charter schools. So, they basically had a side agreement with the union that they would not authorize any new charter schools for a certain period of time, subject to a couple restrictions. That’s not legal because the law requires you to review the charter application and accept it or deny it based on certain criteria. None of the criteria include that the unions don’t like it, so the union is forcing the school system not to, they’re asking you not to. That’s not a good, valid basis for saying no to a charter application. But, they reached a side agreement, which did exactly that. So that’s illegal, so we thought about and analyzed the advantage of filing a lawsuit over that issue.”

CJLPP: “To wrap up, do you think that charter schools are a positive direction to go in terms of school choice? Do you see any problems with it?”

Chizewer: “I definitely do think it has had a positive impact. But, you shouldn’t overstate it, it is tricky. Look, a charter school can fail, just like a public school can. I don’t know if they might be less likely to fail. Certainly, and particularly in certain areas. But, that’s not even the point. On the one hand you could say, nine out of ten businesses fail, but that doesn’t mean you should get rid of a capitalist system because the businesses that do succeed thrive and provide tremendous benefits and maybe that’s the system that you need to be able to produce the best possible schools. On the other hand, schools are a little bit different from businesses because you don’t want to necessarily be experimenting on kids. They need to have good education from the get go. And the finances behind charter schools are tricky as well because if a school district approves a charter school, it’s not as if all of a sudden there’s now more money in the district to fund that charter school. Typically, the district has a set amount of money, and they can spend it on a thousand students at one school, or they can spend it on five hundred students at two schools, a regular school and a charter school. Sometimes spending it on two schools can be more expensive than spending it on a thousand students at one school, so it can strain budgets. But it doesn’t mean that you should just automatically choose the cheaper version every time. Particularly because you want to think of it as not the district’s money, but the student’s money. The money is there for the students to spend. If the parents or the students want to structure the school district in that way and there’s enough demand in a school district for a charter school, then maybe that public school isn’t doing everything correctly. So, where the demand is there, I think it is important to address it. And, often charter schools can be very good at fundraising and can have extra dollars they need so that everybody can get the proper education.”

CJLPP: “Can you reflect on how your time at Pomona has affected what you have done within your career? Do you feel your experience here has shaped your path? In what ways and how?”

Chizewer: “When I arrived at Pomona College, as I was telling the students today, it was rare that someone from Illinois was attending Pomona. One of my roommates was an African American kid who had grown up in one of the most dangerous public housing complexes in Chicago. I was from Chicago too, and we had that particular bond. Although, I did not grow up anywhere near a public housing complex, upon learning and meeting him, I was amazed that he found his way to Pomona College because I grew up in a somewhat affluent area, went to a public high school, had great college counseling, but most people from the town that I lived in had never heard of Pomona College.

So how does this kid from a public housing project make his way to Pomona College? Well it turns out, he had attended a private boarding school for high school on a scholarship. He went to Taft boarding school in Massachusetts, basically surrounded by, really the one percenters. And, as a result, at this private boarding school, he not only developed a support system, filled with powerful, influential people, but he also had great college counseling and these schools knew of all the good small liberal arts schools and they directed him to Pomona. And by the time he got to Pomona, he had just an incredible network of people that was the envy of anybody who went to Pomona College whether you’re on financial aid or not. And that left a huge impression on me.

After college and law school, I was out in the world and making a living and realized it was time now for me to give back. I thought about the different ways and things that I could be involved in, and I really thought back about that scholarship. So, I basically just started calling around to private high schools in Chicago to determine whether they were aware of any programs that were sending them kids along with dollars to fund their education at their school. One of the schools put me in touch with this one guy who was ten years older than I was, who was just starting something like that and was funding one kid. He had founded this foundation called “The Daniel Murphy Scholarship Foundation.” He named it after his father, who had passed away, and I contacted him, I told him about my experience and I helped him with that organization and over a number of years it grew from one kid to four hundred kids.

A spinoff of that organization was then formed by him and me and a couple other people when Illinois passed a charter school law. We figured that instead of doing all this fundraising to send these kids to private high schools, which is still important, we could use public dollars to start our own high schools modeled after these rigorous prep schools, and do it on the public dollars for charter schools. And that’s how I got about, and charter schools are a big part of what I do, actually our firm now does a lot of work with charter schools. And so, it all comes back to that very tangible Pomona experience and my roommate.”

CJLPP: “Thank you so much. The Claremont Journal of Law and Public Policy really appreciates your time sitting with us today.”

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